1 Absorption Costing Versus Variable Costing 2 Wall Tech Company produces wood siding company has no finished goods inventory at the bepinning of year 1. The following information pertains to Wall Tech Company 200,000 Variable Product Annual Production Sales Price, per unit Variable Production Direct Materials Direct Labor Variable Overhed Fixed Overhead FOH per unit Variable S&A, per unit Fixed S&A 1,000,000 Absorption Product 800,000 15 Required: 16 1 All 200,000 units produced during year 1 are sold during year 1. Prepare a traditional income statement assuming the company uses absorption costing Prepare a contribution margin income statement assuming the company uses variable costing 2 Although 200,000 units are produced during year 2, only 170,000 units are sold during the year. The remaining 30,000 units are in finished goods inventory at the end of year 2. Prepare a traditional income statement assuming the company uses absorption costing Prepare a contribution margin income statement assuming the company uses variable costing D . / / / / / / / / Year 1 Sold Units Absorption Method Sales COGS Gross Margin Selling and Admin Operating Profit Variable Method Sales Variable Costs Product Selling and Admin Contribution Margin Fixed Costs Fixed Overhead Selling and Admin Operating Income Absorption less Variable Difference is the amount in Ending inventory Produced Sold Cost defered (released) inventory FOH, per unit Cost defered (released) inventory